Loblaw is buying Shoppers Drug Mart for $12.4 billion

Loblaw Companiesannounced this morning that it’s buyingShoppers Drug Mart, a high-stakes move that should help it compete with the incoming onslaught of new Whole Foods and Target stores. The deal, which Loblaw scion Galen G. Weston and Shoppers chairman Holger Klugehammered out in a van on a country road late last week, will see Canada’s largest grocery chain pay $12.4 billion in cash and stock for Canada’s biggest drugstore chain, provided it’s approved by shareholders and the Competition Bureau. By taking over Shoppers’ 1,200 drug stores, Loblaw shouldnet greater negotiation clout with suppliers, an estimated $300 million a year in economies of scale and a significant share of Canada’s pharmacy business. The mega-corp will also obtain hundreds of small-format urban spaces, which it’ll need if its new health-focused pharma-grocery store concept catches on. Loblaws says no stores will close asa result of the merger, and—for all the Life Brand diehards out there—Shoppers’ in-house label isn’t going anywhere.